A Lot of People are Retiring in Stages


I was talking with a close friend recently who works as a trade with a major manufacturer. He said that for many years now, he could work overtime just about any time he wanted. At his plant, many trades have often worked 7 days a week.  But since Covid, most people are turning down the overtime; especially people late in their careers. “I’m winding down”, he said. “I’m interested in working less, not more.”  For him, this is Stage One of retirement.  As much as he still has a full-time job, he’s already changing the pace and giving himself more freedom and more free time.

I’m witnessing that most people these days are doing some version of the same thing. Their plan is to retire first from what has been their main career for decades.  But many are planning to continue working at something or somewhere else.

The difference is that the new job will be entirely on their terms. Whereas the job they’ve held all these years comes with commitments and obligations that their employer defines – the hours they work, their duties, the number of days vacation etc – the next thing they do, if anything, will put them in control of all those factors.

The words “if anything” are key. Because retirement for them isn’t about whether they will work or not.  It’s about whether they HAVE to work or not.

And that adds a dimension to the planning discussions they have with me. In the past, people usually just asked “can I afford to retire?”, which meant, “can my pensions and investments carry me for the next 30 years i.e. can I afford not to have a paycheque at all?” That is still a common question. Saying “yes” to it carries the most power and freedom.

But people are also asking, “can I afford to earn a lot less for the next X number of years and still remain financially secure over the long run?” Quite often, the new job is connected more to their personal interests or hobbies. When someone told me recently that he was retiring, I asked him jokingly whether he would now be driving a shuttle for a car dealer or working as the marshal at a golf course. People don’t do these jobs for the money. They do them because it makes their day interesting and it gives them an opportunity to interact with people with very little stress or pressure.

Whether you need some income from a less lucrative source or you need no income from working at all, comprehensive planning can support these decisions so you can go into them with strength and confidence. I regularly model different scenarios for people to help them understand the financial impact of various options they are considering. It can drive a lot of other decisions too, such as if/when to take CPP or how much to pull from RRSPs – whether it is to generate income or just to take advantage of a long-term tax advantage. I often say, there are a lot of moving parts to a financial plan.

It works best when clients open up and share what is on their minds. An off-the-cuff comment such as “if I could, I’d retire tomorrow” may end up starting a conversation that leads to rewarding and fulfilling changes in their life. Because what I will usually say next is, “Let’s talk about that. Maybe you can!”

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